Facing at least 400 consumer lawsuits over last year’s recall of Renu MoistureLoc contact lens solution, as well as possible class action lawsuits by shareholders, Bausch & Lomb posted a disappointing financial report last month. The earnings report, which is for the first quarter of 2006, was filed late, in part because the company needed time to assess the financial losses caused by the recall. According to the report, the Renu MoistureLoc recall reduced Bausch & Lomb’s first quarter 2006 net income by $19.6 million dollars.
Bausch & Lomb’s troubles began in 2006, when Renu MoistureLoc was linked to Fusarium Keratitis, a rare eye infection that has the potential to cause blindness. The company pulled MoistureLoc from Asian markets in February 2006, and did the same in U.S. in April, before finally issuing a worldwide recall on May 15, 2006.
As of June 30, 2006, the CDC had confirmed 164 cases of the eye infection. The same report said that those infected were 20 time more likely to have used the MoistureLoc solution. The CDC report determined that bad hygiene habits among users were not to blame for the infections, but that that contact lens solution appeared to have poor disinfectant qualities.
In October of 2006, the FDA issued a warning letter to Bausch & Lomb, criticizing the company for not reporting nearly three dozen infections linked to MoistureLoc that occurred before sales of the product were suspended. The letter also cited the company for numerous violations at its Greenville, South Carolina manufacturing plant. Whether or not the company has addressed those problems remains to be seen. In March 2007, Bausch & Lomb issued a voluntary recall of another contact lens product, its Renu Multiplus Solution, for having trace amounts of iron. The Multiplus Solution is also manufactured at Greenville. The iron could lead to a shortened shelf life for the solution.
Analysts have estimated that Bausch & Lomb could face potential liabilities of as much as $1 billion over lawsuits stemming from the MoistureLoc debacle, although some have predicted that the amount will be much higher.
Bausch & Lomb is also facing the potential of class lawsuits on a much different front, arising from the company’s proposed merger with a private equity firm. On May 16, the company announced that it had agreed to be acquired by Warburg Pincus for about $4.5 million. Soon after, public shareholders sued Bausch & Lomb and its directors challenging the acquisition, alleging that the price is inadequate. The plaintiffs in each of those suits are seeking class action status.
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